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The Economics of Moneyball

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Abby McDonough

on 8 June 2015

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Transcript of The Economics of Moneyball

The Economics of Moneyball
Ashley White, Alyssa Lopez, + Abby McDonough
As a result of having very limited finances, Billy Beane decided to try a new and unprecedented approach to increasing productivity by using statistical analysis instead of visual appeal or other factors generally valued by professional athletic committees when drafting players. Peter Brand pioneered this method in the movie.
Another concept that is widely discussed in the film is opportunity cost. Billy Beane has a choice between a full ride to Stanford or going straight to the Mets. Billy chooses the Mets, but he doesn't pan out, and he is left with a rotten career and no education.
Basic Econ
Moneyball, a film based on Michael Lewis’ 2003 book, details the struggles of the Oakland Athletics, a major league baseball team. The Oakland A’s overcome some seemingly impossible obstacles with the help of their general manager, Billy Beane (Brad Pitt), by applying innovative statistical analysis, known as sabermetrics, pioneered by Bill James.
Economics is the study of how people use their scarce resources to satisfy their unlimited wants or more simply, how choices are made when faced with scarcity. In Moneyball, The Oakland A's are one of the poorest teams in baseball and face a monetary constraint that they can't afford the best players for their team.
Later in the film, we see the idea of opportunity cost again as Billy Beane faces another pivotal decision. Beane must choose between continuing as the GM of the Oakland A’s or accepting a new job offer as the general manager of the Boston Red Sox. The opportunity cost of staying in Oakland is the 12.5 million dollar offer from Boston as well as external validation of his efforts to reinvent baseball. The opportunity cost of leaving for Boston is the contract offered by Oakland, the team he invested himself in over the past season, and most importantly losing the relationship Beane has with his teenage daughter who he shares with his ex-wife in California.

"Moneyball - Google Search." Moneyball - Google Search. N.p., n.d. Web. 04 June 2015.
"Moneyball." - Media Library. N.p., n.d. Web. 04 June 2015.
YouTube. YouTube, n.d. Web. 04 June 2015.
In the end the strategy is extremely successful. The A's win 20 consecutive games and the Red Sox win the World Series using the method. The Wall Street Journal published an article in 2011 stating that Moneyball had effectively changed the game forever.
Application of Moneyball Theory to Modern Baseball
The Moneyball Theory is used partially for drafting
players(viewing statistics for Hr's, Rbi's, and etc), but it overall plays a small role in the selection of players. MLB teams stick with the traditional method of choosing players based on fan appeal, playing capability, and on-base percentage. Although the Moneyball Theory has revolutionized the process of drafting players, teams feel more confident choosing players based on visual game play.
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